Deutsche Telekom Posts Profit In Q4; Maintains Dividend

2/28/2013 3:25 AM ET

German telecom giant Deutsche Telekom AG (DTEGY.PK) reported Thursday a profit in its fourth quarter compared to a loss last year. Adjusted EBITDA, a key earnings metric, fell 12.7 percent, due to weak performance in regions of Germany, Europe and United States.

In fiscal year 2012, the company slipped to a huge loss on charges related to planned business combination of T-Mobile USA and the competitor MetroPCS Communications, Inc. (PCS). Further, the company maintained its dividend, and said it sees EBITDA growth in fiscal 2013, including MetroPCS.

Deutsche Telekom CEO René Obermann, said, "This loss of billions is not what it appears to be: We are not lacking in funds to drive forward the development of the Group. As we said in December, we want to massively step up investments in the future again, to almost EUR 30 billion for 2013 to 2015."

In its recently concluded fourth quarter, net profit was 793 million euros, compared to a loss of 1.34 billion euros in the prior year. Profit per share was 0.19 euros, compared to a loss of 0.31 euros last year.

Adjusted profit per share, which excluded certain items, was 0.05 euros, compared to a loss 0.02 last year.

Deutsche Telekom's U.S. unit, T-Mobile USA, reported a fourth-quarter net loss of $8 million, compared to a loss of $5.40 billion last year. The prior year results included an impairment charge of $6.42 billion.

EBITDA margin, adjusted for special factors, dropped to 27.3 percent from 30.9 percent a year ago, largely due to the increase in market investments in the German mobile communications market. Ongoing competitive and price pressure and regulatory decisions also had a negative impact on the reduced EBITDA margin, the company added.

Mobile subscribers at the end of the period totaled 132.32 million, higher than last year's 129.33 million. T-Mobile ended the quarter with 33.4 million customers, representing net additions of 203 thousand customers.

In 2012, Deutsche Telekom slipped to a huge loss of 5.26 billion euros or 1.22 euros per share, compared to last year's profit of 557 million euros or 0.13 euros per share. The loss is almost entirely attributable to 7.4 billion euros of impairment loss related to the planned business combination of T-Mobile USA and MetroPCS.

Further, the company said its Board of Management and Supervisory Board will propose an unchanged dividend of 70 euro cents per share to the shareholders' meeting on May 16.

Looking ahead for fiscal 2013, adjusted EBITDA is expected to amount to around 17.4 billion euros, compared to last year's 17.98 billion euros. Assuming successful completion of the transaction with MetroPCS, the expected adjusted EBITDA would be around 18.4 billion euros.

In Germany, the company aims to return to underlying service revenue growth in 2013.

Including MetroPCS, the company projects revenue growth in 2014, and expects adjusted earnings per share to improve to around 0.80 euros in 2015.

On Frankfurt's Xetra, Deutsche Telekom shares are currently trading at 8.18 euros, down 0.05 euros or 0.60 percent.